Joan MacNaughton, President of the Energy Institute and a highly influential figure in the international energy policymaking world, calls on “the big CO2 emitters” in the world to take unilateral action to reduce CO2 emissions. Countries that refuse to get along, should be penalised through import duties or carbon taxes, suggests MacNaughton. The current talk about “adaptation” to climate change, says MacNaughton, is a “cop-out”. Energy Post editor Karel Beckman spoke with her in Groningen.
Joan MacNaughton, currently President of the London-based Energy Institute, has been a highly influential figure in climate and energy policy for many years in various roles. Among many other things, she was Director-General Energy in the UK (from 2002 to 2006) and Chair of the Governing Board of the International Energy Agency (from 2004 to 2006). From 2007 she worked as Senior Vice-President Environmental Policies and Global Advocacy at Alstom. She is also a Fellow of the International Emissions Trading Association (IETA), Chair of the new International Advisory Board of the Energy Academy Europe in the Netherlands and Executive Chair of Energy and Climate Policy Assessment at the World Energy Council (WEC).
One of her passions is carbon markets and emission trading. She was Vice-Chair of a high-level panel set up by the UN to evaluate the Clean Development Mechanism, which published a report in November 2012 that concluded that the CDM has been a success, although certain reforms were needed. MacNaughton is convinced that internationally linked carbon markets are crucial tools to enable the world to reduce CO2 emissions in a cost-effective way. But she is greatly concerned about the way in which climate negotiations have been evolving over the past few years . The outcome of Warsaw did nothing to reassure her, she told Energy Post in an interview last week at the Energy Convention in Groningen.
How do you look back on the Climate Conference in Warsaw? Has it made you more optimistic or pessimistic about the chances of reaching an agreement?
Not more optimistic. There were a lot of setbacks. There should have been a stronger commitment to the 2015 agreement, giving confidence in the level of ambition there will be on mitigation. I would have preferred more progress on a range of other issues, such as the Green Climate Fund (GCF). And then of course there was Japan’s changed commitment. They have changed their baseline from 1990 to 2005, which means that instead of a 3% reduction they will have a 3% rise in emissions compared to 1990. I have heard this is partly to put pressure on the greens to give up their resistance to nuclear power.
So what will happen next?
There are two scenarios. One is that we will get an agreement in 2015 that will be strong and vigorous and can be implemented quickly enough to deal with the problem. And the other, which looks slightly more likely, is that we don’t.
And what if we don’t?
Then we need bottom-up initiatives. What we need above all is leadership from some of the big emitters. They should not wait until everyone is in it. They should say this is what we’re going to do. The rest of you had better get along. If their industries are worried about carbon leakage, the governments should signal now that they’ll take action, for example that in a few years, they will be saying, why should we import your goods from you, if you still have a high-carbon economy? Or indicate that they’ll impose carbon taxes at the border.
At this moment in China one million new cars are sold each month
What should an agreement look like?
For one thing, since a 2015 agreement will not take effect until 2020, what is needed is to build in flexibility, so that those who start implementing it early, won’t be penalised later on. That has the advantage that countries can tackle the problem more quickly. That will allow them to move effectively without the fear that in 2020 their baselines will be adversely affected. Some of the international organisations are already thinking about how this early implementation should look. Secondly, what we need to do is create global carbon markets. The World Bank is thinking about how to do this and I applaud them for that. We need to make sure that we build a bridge between current and future arrangements for emission trading and other market mechanisms – to allow as much mitigation to take place as quickly and cheaply as possible.
Will such mechanisms have to be tied to the Kyoto Accord to allow such a transition? Or is it possible to create something entirely different?
To be honest, one of the problems of the negotiations has been that everybody starts from the legal structure and then looks at the impacts. I think you need to look what we need to achieve and then build a legal framework around it. Whether the new framework is tied to Kyoto or not is a second-order question.
Do we need fixed emission ceilings to make an agreement effective and build carbon market mechanisms?
It’s crucial that there are ceilings. We have a problem now with the Clean Development Mechanism because the level of mitigation ambition is too low and with the EU Emission Trading Scheme (ETS) because with the benefit of hindsight we can see the ceilings were not set right. But what matters in the end is a country’s commitment to a ceiling rather than whether it’s written down in an international agreement.
So you believe a voluntary agreement could be sufficient?
Well, any agreement is voluntary, because it’s unenforceable. Countries can walk away from an agreement. Some have already done so. What can you do about it? A voluntary agreement that’s sincerely meant with a good robust target may be much better than an unenforceable obligatory agreement. Countries may be more reluctant to commit to a more ambitious emissions reduction if it’s said to be obligatory. Either way, we do need methodologies to assess reductions and the quality of reductions. We can’t just have someone say, this is my target, now leave me alone. There has to be some international transparency about the targets and how they can be achieved. And we have to have linking mechanisms to underpin the huge international trade that we need. To underpin global carbon markets which are going to create opportunities for lowest-cost reductions and to underpin technology transfers.
Of course you need to adapt. But what are you going to adapt to?
You say leadership is needed. Do you see it? In the US, China, Europe?
I think in principle each is willing to commit to an agreement, but each has certain barriers. In the US there is the Constitutional problem. You need a two-third’s majority in the Senate to get an international treaty approved. We know how difficult that is. But domestically actions have been taken in the US that are quite powerful. Half of the reductions they have achieved have been owing to regulation. And they have other regulations coming down the track.
China has a very ambitious plan on energy efficiency and reducing emissions, partly driven by concerns over pollution. But they have to think how they can accommodate the legitimate demands from their citizens who want a higher standard of living while reducing emissions. At this moment in China one million new cars are sold each month. So they might be amenable to an international agreement, but it has to be compatible with their emphasis on growth and lifting people out of poverty.
The EU has traditionally shown leadership but is very challenged now because of the economic downturn. The EU has to think hard about what the market mechanisms will be in 2020, so that we don’t go through another learning period of several years and delay in scaling up, as we have seen with the CDM.
More and more people don’t believe warming can be limited. They argue we should focus on adaptation rather than mitigation. “Resilience” is another popular term in this context.
I believe the emphasis on adaptation is a cop-out. You turn your back on the problem. Of course you need to adapt. But what are you adapting to? If you don’t know that, your solutions are not going to be very practical. What is more, you’re dealing with the symptoms, not the causes. If you don’t tackle the cause of your problem, you are going to have to adapt more and more – and in the end, you may find that your capacity to adapt just isn’t good enough.